SPX Credit Spread Trader

[andysmith]

Rally,

Nice analysis, good logic

You mentioned gap risk for your ES position. Since that's traded almost 24 hours, I don't see a gap risk. Even if you hold your ES position overnight and your stop is active (1335 I think you said) you should be safe, no?

Quote from rallymode:

I wanted to be more aggressive per point move in the index and the ES is as aggressive as you can get. Lotsa risk too though, gap risk especially makes me nervous with such positions.



The FOMC meets Wed not Tue

i hate predictions but here's my opinion.

1) Fed raises the rate another quarter point and says further hikes maybe needed based on data. - Market sells off.

2) Fed raises the rate another quarter point and implies we are almost done and it will pause sooner rather than later. - Continuation of Fri's rally.

3) Fed doesnt raise the rate and says they are pausing as data indicates economy is slowing without concern for inflation. - Major rally, probably another 20 points or so.

As you can see, if i am right, my odds arent too good therefore i will most likely be out of my positions before the announcement.

EDIT: Also, if you are going to play the pullback with debit spreads i suggest you wait until after the dust settles from the announcement. If i exit my posiitons, i will definitely reenter them at that point but i will not hold through the announcement unless we are 20 points OTM. I can do that easily with futures and not cheat myself with the b/a spread on any options spreads.

 

[andysmith]

What was wrong with the credit?

Quote from rallymode:

Well, i can only tell what i would do and that would be to get out of the way before the announcement if we are too close. But i also would not have opened that spread for the credit you got when you got it, so i dont know what to say.

One thing is for sure, I would wait and see what happens between now and wed 2:15EST before i made any decisions.

 

[Hybone]

I have no problem accessing it. Maybe you want to try it again given that it was months ago that you tried.

Also, make sure that you didnt have anything running in the ackground that was locked up. I had some .pdf files locking up in the background once that was slowing the TOS platform to a halt. it wasnt until I was shutting down th ePC at the end of the day that I noticed the locked up pdf files. It was back to normal after clearing up those locked up files.

Quote from gypsies:

I concur that Remote Desktop is fantastic in general, and use it both from work to home, and from home to work everyday, as well as from my laptop when traveling. However it was beyond slow with the TOS client running on my machine at home and did not function well, it could not keep up with the screen changes. This was also on Broadband, so access speed was not an issue. I believe the way they painted their screens created too much traffic for Remote Desktop to handle. This was a trial that I did last July, perhaps TOS made improvements. TOS's sign up process was also unstable, and when I called in, they said to just pick another sign in name and try again. They would let the programming staff know what had happened, "perhaps they could fix it". Did not give me a warm feeling. I did talk with one of the top guys, and he was extremely helpful, supportive, and created a great impression of the company, as well as explained their hedge, not taking $ for orderflow from the exchanges, (ie always trying to get the best execution for their customers). But with the technical difficulties, it just didn't work out. Not to worry, I am

 

[Shams78]

With the FOMC to report on Wed. what's everyone's opinion on a Iron Condor I have open for May 1235/1245/1340/1350. I'm not concerned about the put side but the call side is what worries me. Normally when I open a IC with less than 15 days to expiration I'll wait until the underlying is 10pts from my short to adjust but with the feds news coming Wed., and the recent market momentum we could be in for a pull back or another surge, all this in a week when theta starts working for us. Anyone have any thoughts on this position. I'm thinking I'm going to see how the market reacts on Monday and if it's down look to close the call side, to play it safe.

 

[rallymode]

Quote from andysmith:



You mentioned gap risk for your ES position. Since that's traded almost 24 hours, I don't see a gap risk. Even if you hold your ES position overnight and your stop is active (1335 I think you said) you should be safe, no?

The ES is not all that liquid after hours. Only about 20k contracts or so change hands between the time markets close and open. If some major news comes out and pushes the market higher these 20k contracts will change hands within 60 secs, it is likely that the bid will cross the ask. It could be 2 points, it could be 20 depending on the news. I've personally seen a cross of 5 points with no asks in between, so gap risk does exist. Which is why i dont consider using futures as a hedge to anything, but rather as a whole new trade with its own risk/rewards.

 

[rsflint]

Quote from rallymode:

i hate predictions but here's my opinion.

1) Fed raises the rate another quarter point and says further hikes maybe needed based on data. - Market sells off.

2) Fed raises the rate another quarter point and implies we are almost done and it will pause sooner rather than later. - Continuation of Fri's rally.

3) Fed doesnt raise the rate and says they are pausing as data indicates economy is slowing without concern for inflation. - Major rally, probably another 20 points or so.

I think they are going with #1.

However, you never know so I need to be careful with my May IC:

1245/1255/1350/1360

Rookie Rich

 

[cdowis]

Shams78,

Let me understand.

You have a short call at 1335, May, and FOMC meeting on Wed. The market has broken to the upside out of a channel, the ema is up.

And you want to know what to do.

That's a tough one. :<)

 

[cdowis]

>1) Fed raises the rate another quarter point and says further hikes maybe needed based on data. - Market sells off.

Market sells off into the channel and breaks back out of the channel to the upside after a week.

 

[rallymode]

Quote from cdowis:

The market has broken to the upside out of a channel, the ema is up.

And you want to know what to do.

That's a tough one. :<)

The EMA has been up since roughly 2002 and the SPX hasnt broken out of the channel yet.

 

[momoneythansens]

Alas, channels are in the eye of the beholder.

Behold, random channel generation for your entertainment

Quote from rallymode:

The EMA has been up since roughly 2002 and the SPX hasnt broken out of the channel yet.